The rise of the extended enterprise in today’s digital economy

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Part 1 of the blog series: Navigating your digital journey with extended enterprise partners

Read part 2 of this executive series

The concept of an “extended enterprise”— that is, a network of partner relationships—is not new. A single company cannot operate successfully in a silo to serve its customers best. Instead, a successful corporation depends on an ecosystem of partnerships, including suppliers, system integrators, and innovation partners such as universities, startups, technology alliances, and more. For Schneider Electric, this extended enterprise ensures that Life Is On™ everywhere, for everyone, and at every moment.

The concept of extended enterprise is rising today because of several converging factors:

1. The world is becoming more local. Even as globalization strengthens, evolving localized needs are prompting the end of a “one size fits all” centralized approach. The key question then for multi-national corporations to answer is, “How will I address this variety of needs?”

2. The rapid rise of digital and ever-changing technologies calls for more agility and responsiveness. For better agility, large, incumbent MNCs now must be able to look beyond established industry boundaries in order to meet their customers’ expectations. This transformation demands a new management style that nurtures digital talent, empowerment, an innovative spirit among employees, and ongoing learning. It also requires strong partnerships with startups, universities, developers, and system integrators to fuel an innovation ecosystem that can act fast, adapt permanently, and create market-relevant breakthroughs.

3. Digital technologies that enable customer-centricity require more sharing and co-innovation. To solve specific customer problems and provide distinctive experiences. Instead of developing technologies in a vacuum, successful technology providers lead with the customer in mind, integrating their customers and their entire ecosystem in the co-innovation process.

How are we forging an extended enterprise to leverage these digital sea changes?

Global yet local

With widespread connectivity, global organizations can decentralize governance and operations by adopting a multi-hub, multi-connected extended enterprise approach. This ability to localize enables companies to remain close to customers and to the local ecosystem and, in turn, respond better to their tailored expectations. Customer centricity is the key differentiating factor, and it also requires an extended ecosystem to serve customers best—one that can be enhanced through digital technologies.

Schneider Electric in particular works closely with a vast ecosystem of more than 650,000 service providers and partners, 3,000 utilities, and 20,000+ developers and system integrators such as our EcoExpert™ partner MC² to create specific solutions for customers. And we are immersed in our 21-one stop Innovation Summit World Tour to hear from thousands of customers about their challenges and how we can serve them better with our digital solutions.

Agility and responsiveness

In a world where co-innovation and customer-centricity are the new norm, it becomes critical for every company to leverage the brainpower, agility, and disruptive ability of a large ecosystem, to create competitive, innovative differentiation. Startups, which help address burning market needs, are one part of that ecosystem. Schneider Electric finances innovative firms in the fields of energy, IoT, cybersecurity, new materials, and the environment.

Building this innovation ecosystem requires what our Chief Digital Officer Hervé Coureil calls a “healthy paranoia” to scrutinize what’s happening beyond traditional industry boundaries. See his blog on this topic. 

Customer-centric digital innovation

As I mentioned in my recent “Disrupt or be disrupted” blog post, we advance co-innovation to scale our EcoStruxure™ digital solutions to specific customer needs, leveraging our Digital Services Factory. Our own extended ecosystem includes strategic alliances with technology leaders such as Microsoft, AWS, Salesforce, Accenture, Cisco, and Intel. This alliance approach, as evidenced by our collaboration with Microsoft, is helping us accelerate our customers’ digital transformation, as recently discussed by our EVP of IoT & Digital Offers Cyril Perducat and Microsoft’s General Manager of Manufacturing Çağlayan Arkan. Through co-innovation, customers such as the machine builder Italpresse Gauss can transform their own business models and offer innovative maintenance and support services.

Thriving in the digital economy

The rise of digital calls for the ability to be local in a global world, agile in a fast-changing technology landscape, and open in a co-innovation ecosystem. An extended enterprise, supported by digitization, is the answer to thriving in the digital economy. As Deloitte’s Brent Nickerson says, “Really, now it’s all about the extended enterprise—the exterprise.” That means going beyond a company’s core. Customer-centric innovation cannot happen without broadening this core.

Read Part 2 of this “Navigating your digital journey with extended enterprise partners” executive blog series:  “Scanning the periphery of digital disruption” by our Chief Digital Officer Hervé Coureil.